Dax Technical Analysis 21/07/2016

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Hello traders!

Dax Technical Analysis

05 Dax m5 Chart

Yesterday we talked about being choppy and traders getting thrown around from one bias to the other and my thinking was that we needed to watch for either a break below 9900 or a break above 10160.

We started off pretty bullish this morning, the recent high was taken out within the first half an hour of trading, topping out around the daily R1. Price then reversed down to the daily pivot creating a daily low around 10090 and now seems to want to level out and find some balance.

Dax Bears

On the hourly chart below, we have trend line resistance going back to April. It was pierced briefly in June before the UK referendum result and it is currently reacting to the line as we speak. As there is no strong trend at the moment, a range trading strategy could be interesting to use; buy low and sell high relative to the range. Right now we are fairly high in the range. Also USDJPY and the SPX500 have both dropped off this morning and Gold has rallied so the Dax could still fall further, which adds to the strength of the daily 200 EMA as resistance. These are the technical reasons that are in the bears favour.

Dax Bulls

The article yesterday discussed the outlook for the Dax being relatively bright and perhaps somewhat undervalued currently, when compared with other indices. Overall, we are short-term bullish above 9900 and that would be just under the daily S2 intra-day. We have already created a higher high, continuing the bullish momentum and are holding up around the daily pivot currently. If we do experience a pullback from current levels 10125, then I think bulls find the 10025-10050 zone interesting.